Trouble at ParaSpace causes ripples in NFT market; BAYC and MAYC impacted
- ParaSpace governance began to see conflict due to CEO’s behavior.
- Yuga Lab NFTs saw a decline in interest. Milady begins to capture market share.
Decentralized lending protocol ParaSpace witnessed some conflicts within its governance over the last few days. ParaSpace allows users to borrow and lend against NFT tokens.
A scoop of the Coup
A group comprising over twelve personnel, including the Chief Operating Officer (COO) of ParaSpace, seized the reins of the organization’s official Twitter account.
They endeavored to counteract the CEO’s actions and removed his authority from the protocol. The group made allegations against the CEO of having an unchallenged hold on the project’s finances and failing to provide relevant financial information.
After getting access to the official Twitter account, the team stated that they had no plans for any malicious behavior.
Dear ParaSpace Community,
TL;DR: There have been no malicious acts from the team. All funds are safe from Yubo, the protocol is under the full control of the team, and we have the financial means to ensure the stability of the platform.
Today, we are sharing information brought… pic.twitter.com/58M3U1uLwv
— ParaSpace (@ParaSpace_NFT) May 10, 2023
They also issued a statement to the community regarding the recovery of funds from a hack that took place on 18 March, 2023.
The team discovered that user funds were not fully returned to the protocol, and over $1 million USD equivalent amount has outflowed to various unknown wallets and CEXs.
The protocol was under the exclusive control and management of Yubo Ruan, CEO/CTO, who the team has since removed due to his failure to comply with their requests.
The team secured the protocol’s multi-sig. This meant that Yubo cannot access user funds and assets. They are committed to addressing this situation swiftly and effectively to reinforce the strength and resilience of the ParaSpace community.
Impact on BAYC and MAYC
Due to these conflicts, large amounts of withdrawals took place. On 10 May, the withdrawals on the platform exceeded approximately $35 million. The withdrawals included 138 BAKC, 591 MAYC, 278 Otherdeed, 264 BAYC, 72 Meebits, and other assets.
Most of these NFTs were part of the Yuga Labs cohort.
Realistic or not, here’s APE’s market cap in BTC terms
These events had an effect on these blue chip NFTs at press time. NFTGO’s data indicated that Bored Ape Yacht Club’s (BAYC) floor prices declined materially over the past month.
Additionally, another popular collection, known as Mutant Ape Yacht Club (MAYC) observed a decline in the number of holders. The number of whales holding this collection dropped significantly over the last few months.
Moreover, as FUD around these NFT collections rises, new NFTs such as Milady continues to capture large amounts of market share.